These tools help manufacturers mitigate some of the risks associated with the JIT model and manage supply chains better. Supply chain and distribution management technologies that offer a real-time view into all stages of a company’s supply chain allow for smarter demand and sales forecasting and enable more informed supply chain planning and decision making. Alongside adapting inventory management and sourcing processes, auto manufacturers and distributors need to accelerate investment into technologies. While these measures should alleviate the problem to some extent, they are not enough. Manufacturers can easily visit them, enhancing the ability to maintain quality control. Local suppliers are more easily overseen. Using fewer product transfers and shorter routes to produce and deliver parts increases the chance that companies will receive them when they’re needed. Working with multiple local or regional suppliers in the future can help minimize the risks of parts shortages, safeguard auto production and repair schedules, and simplify and improve the supply chain and distribution process. If a material or part arrives damaged from a supplier, replacements are not easily accessible. Companies can not receive the materials and components that are critical to production. Shutdowns, production delays, high freight costs, and labor shortages can have catastrophic consequences on inventory levels. Relying on international parts suppliers can lead to substantial logistics costs, delays, and high risks in times of unexpected disruptions. Other factors also play a role in ensuring companies have adequate inventory levels to maintain their businesses. While, less crucial parts can be ordered as needed. Stockpiling more critical parts, especially if they are irreplaceable like semiconductors, will help them minimize production delays and avoid another chip shortage. Just-in-case is an inventory system in which businesses keep large inventories on hand to reduce the risk of back orders and make their supply chains more agile and resilient in the face of supply and demand uncertainties.Īuto manufacturers and distributors need to make adjustments to their inventory management practices in areas of their greatest vulnerability. But, meeting in the middle and using both just-in-time and just-in-case inventory models can be the solution to help companies build stronger and more flexible supply chains. Storing less inventory has advantages as it increases efficiency and reduces costs. auto production still has not recovered to pre-pandemic levels.ĭespite parts inventory setbacks, it is unlikely that auto manufacturers and distributors will want to replace just-in-time inventory entirely. Inventory issues have led to challenges for auto manufacturers and distributors who cannot produce or supply as much as they did before the pandemic, making JIT inventory a luxury for many at the moment. Supply chain issues, the global chip shortage, and production delays have highlighted the problems with the just-in-time inventory model.

A modern car is made up of tens of thousands of individual parts.

Just in time inventory model